Why Alteryx Stock Bounced Higher Today

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What happened

Shares of Alteryx (NYSE:AYX) finished higher today as the data analytics software company rode the broader gains in the market as investors took advantage of yesterday’s sell-off. 

There was no company-specific news out on Alteryx, but like a lot of growth stocks, it experienced an outsized pop today, finishing the session up 5.1%. At the same time, the S&P 500 gained 1.5% and the small-cap Russell 2000 index jumped 3%.

Image source: Alteryx.

So what

Unlike most cloud computing stocks, Alteryx has had a rough time during the pandemic. Revenue growth ground to a halt as the company struggled to sell its on-premise software, and it seemed to suffer from being viewed as a luxury product.

Founder Dean Stoecker also stepped down as CEO, being replaced Mark Anderson, a former executive at cybersecurity firm Palo Alto Networks, though that has only added to the perception that Alteryx is stumbling through the transition.

The good news for investors is that the stock’s recent sell-off offers an opportunity as it is still trading down more than 50% from its highs last year. While it’s hard to call Alteryx cheap, it is trading at a relatively modest price-to-sales ratio of 10, significantly lower than many of its cloud peers. If the company can reclaim its former high growth rates, which were close to 80% as recently as Q4 2019, the stock could move a lot higher from here.

Now what

Alteryx investors may also be looking forward to the upcoming second-quarter earnings report as earnings season kicks off this week. Management had called for revenue of $111 million-$114 million in the quarter, which is up 17% at the midpoint from the second quarter a year ago. However, it expects an adjusted loss of $0.24-$0.27 per share, compared to a per-share profit of $0.02 in the quarter a year ago as the company has ramped up hiring in areas like customer success to help rebuild the business.

If Alteryx can impress in its second quarter earnings report on August 3, the stock could have a lot of room to run.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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